mburkhardt@burkhardtlaw.com | (314) 518-1581

Burkhardt Law

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Who Has the Power?

First of all, happy Fourth of July!  In honor of the holidays and those who have made it possible, especially our troops, I want to focus on power of attorneys.  Now I understand the connection between the armed forces and a power of attorney may not be completely obvious, but let me explain.  When out of the country for any reason, most people want to have their estate planning documents for understandable reasons.  But when you’re going overseas unsure of when you’re going to return and without easy communication, it’s a different story.  You need someone with authority over your bank accounts, insurance, maybe even your house.  This is where the power of attorney comes in.

The person making those decisions is called the agent or attorney and fact and the person actually making the document is sometimes referred to as the principal.   Now, power of attorneys come in many different forms and for many different decisions.

There are two types of power of attorneys that are important for most families’ estate plans: a springing power of attorney and a durable power of attorney.  A springing power of attorney only grants the agent the power to act for the person when a certain event occurs.  Hence the springing.  Generally, this occurs when two doctors certify that the person is unable to make decisions for themselves.  This is how I write the majority of the power of attorneys because most families do not need another person able to make decisions over their money and assets.  It also avoids problems when there are conflicting instructions between a person completely capable of making decisions and their agent.  Now, if you are going out of the country and someone needs to be able to access and make decisions for your account, you do NOT want a springing power of attorney.  However, that’s a more detail analysis an attorney can help you make on an individual basis.

The durable power of attorney allows the agent to act for a person if they are incapacitated or if it is unsure whether they are dead or alive.  Because many people execute these forms to plan in case of incapacitation, it’s extremely important to make sure the document has the “magic” language of a durable power of attorney.  As I said before, I generally help my clients with a springing power of attorney.  But I also include the magic durable power of attorney language.

Most people need a financial/legal power of attorney AND a medical power of attorney.  They do not need to be separate documents, but normally are because some people want different friends/family making financial decisions and medical decisions.  Whether it’s one document or two, it’s important they are reviewed to cover most situations, ranging from banking to insurance to health care choices.  A power of attorney may be drafted for almost any specific decision to give another the power to make that decision.  I’ve reviewed documents to allow one sibling to sell a car for the other 6 siblings (much easier than 7 signatures).

What every power of attorney has in common though it’s no longer effective after death.  Therefore the other estate planning documents (wills, trusts, etc) are extremely important.  Also, without a power of attorney designating someone to make decisions, a person must go through the probate court to have someone appointed to make those decisions.  A power of attorney is much easier and cheaper.

On a final note, people ask me when an estate plan is needed, and while many young people do not have enough assets to truly NEED a will, they certainly have the potential for medical issues and absolutely need a power of attorney no matter the age.  Many clients even choose to execute a power of attorney for their minor children’s health care decisions so a grandmother or other trusted caretaker can act in the event of an emergency where the parent is not available.  A great idea if the parents are extremely inaccessible (out of the country, etc).

So if you don’t have a power of attorney or have any questions, give me a call.  Or at a minimum, take the time to execute a free medical power of attorney from the Missouri Bar (found here).

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How Much Do You Know

When I sit down with clients, there’s a varying level of knowledge about estate planning, the different documents, and just what everything means. As such, my job is often to make sure people know how the law works and what happens in different situations so my clients can make the best decisions themselves with advice from me where they want it. So, for this month, I thought I’d start with the basics:

  • pic_06What is probate?
  • What is a will?
  • What is a trust?
  • What is a power of attorney?
  • What is an advance health care directive?

Probate is the court process a person’s property goes through when they die to transfer the property out of the deceased’s name. Wills must go through probate (though it took Esq. behind my name for my mother to believe me on that). You can avoid through non-probate transfers, such as transfer-on-death (“TOD”s), payable-on-death (“POD”s), trusts, joint titling, and other methods. Probate is time consuming and can be very expensive. Because of this many people specifically form an estate plan to avoid probate. If you’re worried about your beneficiaries being unable to access quickly or wasting resources on court, talk to an attorney. There are many methods to avoid probate and not all are appropriate for everyone.

Trusts, however, are the main way to avoid probate. A properly funded trust effectively re-titles property from a person’s name to the trust. The person then decides who benefits from the trust assets and who controls those assets until they pass or are no longer competent to make decisions. Generally, the person setting up the trust may benefit and control the assets. This allows a person who becomes incapacitated to continue to benefit from their property, but gives a different, competent person the ability to make decisions regarding that property.

It’s very important to note the “properly funded” part. If property is not actually transferred to a trust (normally by renaming the asset in the name of the trust), then the property cannot be transferred through the trust documents and must still go through probate and a will or state inheritance law.

So, every estate plan (whether a trust is involved or not) should include a will. Wills set out a person’s wishes upon their death for guardianship of minor children and any property not transferred through non-probate transfers. This means that anything with a beneficiary (i.e. life insurance, retirement plans), TOD, POD, jointly titled, etc. are not given away according to the will.

Along the same lines, every estate plan needs a Power of Attorney. Powers of Attorneys come in many different types, but generally should cover legal, financial, and medical decisions. The document gives another person the power to make decisions for the person. The types of decisions can be limited and the document can be drafted so it only goes into effect when a person becomes incompetent.

Finally, a Health Care Directive establishes a person’s desires regarding specific medical situations. It covers circumstances where a person is unable to make decisions regarding their wishes, but can be used outside of terminal conditions (unlike a Living Will).

A full estate plan covers all of these areas and uses each document to make sure you are completely protected. Hopefully, this has explained the basics for you, but please if you have any questions email me or contact me here.

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Well, It’s Too Late Now…

As I was speaking to a good friend who lives out of state this week we were discussing estate planning; the purpose of various documents, costs, etc. However, because I’m not licensed in the state she lives in, the best advice I could give her was to talk to a local attorney who focuses on estate planning. Unfortunately, time was a factor here, and due to other factors, my friend felt an online service with estate planning forms was the best option. Now, in her situation, it really wasn’t that unfortunate, nothing’s come about (and hopefully won’t) that has caused her to need the documents. But it leads to an issue I’ve heard often.

I’ve been asked many times about inexpensive options regarding estate planning. Specifically, people love the idea of an online site that provides a do-it-yourself form with filling in the blanks. It’s normally, quick, easy, and extremely inexpensive when you’re comparing these forms to a real life attorney. However, as expected, the idea of these sites really does make me cringe.

There are many reasons I’m not a fan of online legal sites, but my top concern is that specifically with estate planning documents, the documents don’t go into effect until it’s too late to change them. For example, if you use a power of attorney from a website, and later go to use it because the person it was created for is unable to make decisions, and then find out its unenforceable, you’re stuck without a power of attorney because the creator is unable to make decisions! So if you use an online site without the benefit of an attorney to catch mistakes, you might not know until it’s very costly and time consuming to fix.

In addition, if there is a mistake a website doesn’t take the liability of that mistake, while many attorneys carry malpractice insurance and provide an additional level of assurance if that mistake does happen (though the chances are much less to begin with).

Another major concern I have with executing estate planning documents without an attorney regards the very specific requirements and formalities execution normally entails. There are requirements as to how many witnesses, who may not sign as a witness, notary publics, who must be present when signing, the language used regarding notaries and witnesses, and many, many more depending on the document. While the online sites give instructions on how to execute a document, they cannot physically be present when executing them the same way an attorney can.

gradpicAlong with this, estate planning documents are notorious for legalese: the legal language rarely decipherable, let alone understandable, outside of the legal profession. How is anyone supposed to fill out a document themselves, when it’s written in a different language? Finally, attorneys have the benefit of working with numerous clients and identifying issues many others would never recognize. As I was reminded multiple times throughout the three years of law school, law school teaches a person “to think like a lawyer.” I don’t know how to think like a car mechanic, but I do know how to think like an attorney and many times I’m able to bring up issues my clients are grateful to talk about, but have not though about before.

Often I hear the joke that a person doesn’t have an estate to plan (I’ll explain why this is incorrect at a different time). But if you’re concerned about assets and well-being enough to worry about any estate planning documents at all, you have plenty of assets to at least talk to an attorney! Many attorneys, including myself, offer free consultations and I would be more than happy to talk to anyone regarding an online will, power of attorney, or other estate planning document to make sure it’s sufficient. If you know of any family or friends who have taken the online form approach, please pass along this information!

Burkhardt Law Firm

Phone: (314) 518-1581
Email: mburkhardt@burkhardtlaw.com
Address:
2333 Grissom Dr., Suite 107
St. Louis, MO 63146